UNAUDITED FINANCIAL STATEMENTS FOR THE FIRST QUARTER ENDED 31 MARCH 2019

Income Statement

Balance Sheet

Review Of Group Performance

Financial Performance

Overview: Despite higher palm production and a strong EOF division performance, the Group reported a weak 1Q2019 with a net loss after tax of Rp130 billion. Lower commodity prices continued to affect the performance of the Group's oil palm plantation and the Brazilian sugar operations. CPO prices CIF Rotterdam in 1Q2019 declined by 19% to an average of US$547 per tonne from US$674 per tonne in 1Q2018.

Revenue: The Group reported higher consolidated revenue of Rp3.4 trillion in 1Q2019, increasing 5% over the same period last year mainly due to strong sales contribution from EOF division. The improved EOF division performance was mainly attributable to higher sales volume of edible oils and fats products. Plantation division's 1Q2019 revenue came in flat compared to previous year, where lower average selling prices of palm products were offset by higher sales volume of palm products and sugar.

Selling and Distribution Expenses (S&D): The Group reported lower S&D in 1Q2019, declining 7% over 1Q2018 mainly attributable to lower advertising and promotion expenses and export taxes. This was partly offset by higher freight arising from higher sales volume.

General and Administrative Expenses (G&A): The Group reported higher G&A in 1Q2019 mainly due
to higher salaries and wages expenses.

Other Operating Expenses: Other operating expenses was lower at Rp23 billion compared to Rp33 billion in 1Q last year mainly due to lower loss on changes in fair value of plasma receivables.

Foreign Exchange Gain/ (Loss): The foreign exchange impacts were principally attributable to the translation of US dollar denominated loans, assets and liabilities. The Group recognized foreign currency gain of Rp4 billion in 1Q2019 compared to Rp22 billion loss in 1Q2018. The gain was mainly due to the strengthening of Indonesian Rupiah against US Dollar to Rp14,244/US$ as of 31 March 2019 versus Rp14,481/US$ as of 31 December 2018.

Share of results of Associate Companies: The Group recognized Rp12 billion loss from share of results of associate companies in 1Q2019 compared to Rp6 billion loss in 1Q2018. The higher loss was mainly due to higher loss from FPNRL (which operates mainly sugar business in the Philippines).

Share of results of Joint Ventures: The Company's share of loss from the Brazilian sugar operations was higher at Rp36 billion in 1Q2019 compared to Rp3 billion in 1Q2018. The higher loss was mainly due to falling sugar and ethanol prices, and forex loss arising from the weakening of Brazilian real.

Gain/ (loss) Arising from Changes in Fair Values of Biological Assets: The Group recognized a fair value gain of Rp22 billion in 1Q2019 compared to Rp12 billion loss in 1Q2018. The fair value gain in 1Q2019 was mainly due to oil palm seeds and timber plantation valuations.

Profit from Operations: The Group reported 60% decline in profit from operations compared to last year, attributable to lower gross profit and higher share of losses from joint ventures. These was partly offset by foreign exchange gain and gain arising from changes in fair value of biological assets during 1Q2019.

Financial Expenses: The Group's 1Q2019 financial expenses increased 33% over the same period last year mainly due to higher working capital facilities and higher blended interest rate.

Income Tax Expense: The Group recognised lower income tax expenses in 1Q2019 in line with lower operating profit. However, the effective tax rates remained high mainly due to non-deductible expenses, write-off of expired tax losses and allowance of tax losses carried forward in 1Q2019.

Net (Loss)/ Profit After Tax: The Group reported net losses after tax of Rp130 billion in 1Q2019 compared to Rp53 billion profit in 1Q2018. This was mainly due to lower results from operations and higher financial expenses.

As of March 2019, the Group total non-current assets of Rp30.9 trillion came in slightly higher compared to Rp30.4 trillion in December 2018. The slight increase was mainly attributable to capital injections in associate companies (i.e. AIM and Daitocacao) amounting to Rp358 billion.

The Group reported total current assets of Rp7.4 trillion as of March 2019, comparing to Rp7.1 trillion in the previous year. The increase was mainly due to (i) higher cash level; (ii) higher trade and other receivables in line with higher edible oils and fat sales; (iii) higher advances for CPO purchase; and (iv) higher biological assets of sugarcane. These are partly offset by lower inventories arising from lower CPO, PK and sugar stocks.

Total current liabilities increased 10% from Rp9.0 trillion in December 2018 to Rp10.0 trillion in March 2019. This was mainly attributable to (i) a net drawdown of Rp0.5 trillion of short-term facilities for working capital; and (ii) higher trade payable and other payables, as well as higher accrual of Rp0.4 trillion due to salary and employee benefits and A&P expenses.

The Group reported net current liabilities of Rp2.6 trillion in March 2019 as certain long-term facilities falling due within the next 12 months.

Total non-current liabilities were at Rp7.7 trillion as of March 2019, similar level as in December 2018. Employee benefits liabilities were slightly higher, but this was partly offset by lower long-term loan facilities arising from payment of loan installments and maturities of certain long-term facilities.

Review of Cash Flows

Despite soft operating results, the Group generated higher net cash flows from operations of Rp441 billion in 1Q2019 compared to Rp234 billion in 1Q2018. This was mainly due to improved working capital arising from lower inventories.

Net cash flows used in investing activities in 1Q2019 was Rp854 billion compared to Rp506 billion in 1Q2018. The increase was mainly due to higher additions of property, plant and equipment and investment in associate companies of Rp358 billion during the quarter.

Net cash flows generated from financing activities were Rp467 billion in 1Q2019 compared to Rp215 billion in 1Q2018. The increase mainly related to proceeds from interest-bearing loans and borrowings to fund the operations.

The net cash increase in 1Q2019 was Rp46 billion, increasing the Group's cash levels from Rp2,229 billion at end December 2018 to Rp2,275 billion at end March 2019.

Commentary

The ongoing economic uncertainties arising from US-China trade tensions is putting a lot of price pressure on agricultural commodities. CPO prices will remain volatile with demand projected from key import markets like China and India, together with the relative price of crude oil which affects biodiesel demand.

The domestic palm demand is expected to be affected by the roll-out of B20 (20%) biodiesel blending in September 2018 to both Public Service Obligation (PSO) and non-PSO sector and the Indonesian government's intention to accelerate the implementation of B30 biodiesel program in 2019.